SAN DIEGO (ETFguide) - After seven long years
since the tech heavy Nasdaq-100 collapsed, technology stocks have been
making a quiet comeback.
Over the past 52-weeks the PowerShares QQQ
Trust, which tracks the widely followed Nasdaq-100 index, (Ticker: QQQQ) has
increased a healthy 26.28 percent.
The Nasdaq-100 includes the largest 100 domestic
and international non-financial companies listed on the Nasdaq Stock Market.
Major industry groups such as biotechnology, computer hardware,
telecommunications, and retail/wholesale trade are covered. The fund's
annual expense ratio is 0.20 percent.
Although the future looks bright, valuations for
tech shares could be stretched.
"On a valuation basis technology stocks aren't
cheap," observes Michael Krause President of AltaVista Independent Research.
"S&P technology stocks trade at 22 times estimated earnings per share (EPS)
versus the broader S&P 500 which is at 16 times EPS." He also notes that
over the last 5 years tech stocks have failed to grow earnings faster than
the broader S&P 500.
Nevertheless, S&P technology stocks (Ticker: XLK)
have registered solid year-to-date gains of 16.04 making them among of the
best performing industry sectors within the S&P 500.
Top holdings in XLK include Apple, IBM, Intel,
Microsoft and Google.
The fund charges an annual expense ratio of 0.23
percent.
For more narrowly focused areas of technology,
Barclays Global Investors offers index ETFs tracking multimedia networking
(Ticker: IGN), semiconductors (Ticker: IGW),
and software (Ticker: IGV). Of the three
Barclays ETFs, semiconductors have performed the best this year gaining
11.58 percent.
State Street Global Advisors also offers a
competing ETF that tracks semiconductors (Ticker: XSD). The fund is up 11.35
percent.
One other sub-sector within technology are
companies that transact e-commerce or business on the Web. The First Trust
DJ Internet ETF (Ticker: FDN) tracks an index of roughly 40 companies
involved in this area and has gained 14.63 percent.
